Parliament considers privatization of Pridnestrovian Railroads

Founded in 2004, Pridnestrovian Railroads owns and manages rolling stock and a total of 8 train stations.

TIRASPOL (Tiraspol Times) - As reported by Pridnestrovie's Minister of Economy, Helen Chernenko, the cabinet and parliament of the young country are studying whether to privatize the state-owned company Pridnestrovian Railroads before the end of the year.

" - We would want to privatize this organization, which already is part of the railroad network of the CIS (Commonwealth of Independent States, ed.), so that our railroad would bring the state income", she told journalists on 6 June.
" - In the privatization, we hope for the participation of Ukrainian investors, our nearest neighbors, since rolling stock mainly covers the Vinnitsa and Odessa regions of Ukraine", noted Chernenko.

As the most industrialized part of the former MSSR, Pridnestrovie has a strong and fairly modernized transport infrastructure, not least in rail services. Its location as a strategic transborder crossing point in South Eastern Europe has in the past served as the basis for an economy which is primarily industrialized in comparison to the economy of Moldova, which is primarily based on farming.

Moldova does not pay its debt

The state-owned company Pridnestrovian Railroads - "GUP Pridnestrovskaya Zheleznaya Doroga" - was founded in August 2004. It owns and manages 8 train stations. In the first year of its existence, it transported 57,370 wagons (equivalent to 2.2 million tons) of exports for Pridnestrovian companies. In the same period a total of 3,535 transit trains passed through the country, carrying a total of 10.3 million of tons of goods for Ukraine and Moldova.

" - The Moldovan Railroads do not wish to pay us for the use of the railways. On the contrary, having accumulated a 3-million-dollar debt in transit payments, now Moldovan trains are bypassing Pridnestrovie. This is not profitable either for Ukraine or Moldova due to excessive expenses and low traffic capacity but the situation is not changing", said Serghei Martsinko, director of Pridnestrovian Railroads.

In response, Moldova, which maintains a 16 year old territorial claim on Pridnestrovie, charges that it should not pay for the use of something which it claims is theirs. This argument, says Martsinko, overlooks two important facts: First, that Pridnestrovie declared independence in 1990 (one year before the formation of the Republic of Moldova), and second, that even if Moldova does not recognize this independence declaration, there are expenses to pay for the upkeep of the infrastructure and the more than 800 workers on the railroad who all need a paycheck every month.

New customs rules on the border with Ukraine, which Pridnestrovie calls an economic blockade, have also hurt the profitability of the local railroads. According to Martsinko, before the introduction of the March 3 blockade, the Pridnestrovian Railroads was a self-financing enterprise thanks to internal cargo conveyances. At present half of the enterprise's workers - about 400 people - are on forced vacations.

130 companies to be privatized

Pridnestrovie started privatizations on a modest scale in the late 1990's, after the transition to a market economy and after having embarked upon a program of economic liberalization. Since 2002, the process of selective privatizations has accelerated. The privatization program for 2006 includes approximately 130 state-owned companies.

More than 3,000 private companies are registered in the state organs of Pridnestrovie. Most are small firms, many operated from home with few or no employees, but some of them are large corporations with multi-million dollar income. Pridnestrovie is home to the privatized MMZ Rybnitsa steel works, ranking as one of the world's ten most advanced steel companies. By law, all proceeds from privatizations enter the state budget of Pridnestrovie where the funds are earmarked for social programs which benefit the population directly.